The main issue in the debate over accounting for employee stock options was:
A) Which employees should receive options.
B) The amount of compensation expense that a company should recognize.
C) How many options should be granted to key executives.
D) The tax consequences of employee stock options.

Question

Quizplus · Accepted Answer

The main issue in the debate over accounting for employee stock options was the amount of compensation expense that a company should recognize. This was a contentious issue as companies did not want to recognize the full cost of offering stock options as an expense, which would negatively affect their reported earnings. However, there were concerns that not recognizing the full cost of options could mislead investors and affect their decision-making. Eventually, accounting standards changed to require companies to recognize the fair value of employee stock options as an expense on their income statement.

The Main Issue in the Debate Over Accounting for Employee